Beware of Cheap Greek Property

Falling house prices are likely to create some appetising opportunities for those with the means to buy.

Probably not here, where Britain's already inflated property market is to be ramped higher by hook or by crook, raising the risk of another bust.

No, these "bargains" are abroad. At least that's the reinvigorated sales pitch from the marketeers.

Consider Greece, where prices fell by 12pc last year and the same again in the first six months of this year. They are now 31pc below their peak. Crystal Investment Real Estate was last week extolling the reasons to buy now, aside from the "sun, sea and sand and an imperishable charm".

It points to a new tourism boom pepping up the economy and a generous new offer from the government to grant speedy five-year EU residence permits to those who buy homes worth more than €250,000. A Chinese man was the first to be fast-tracked last month. Most since then have gone to Russians and Ukranians. Expect a surge of similar buyers, says Crystal, especially when income yields are typically "9pc to 13pc".

Just because prices have fallen so far does not guarantee a bargain. The OECD, for the record, says prices are still 8pc higher against wages than the long-run average.
Valuation aside, of equal concern should be how governments drowning in debt may treat foreigners with means in future.
You may not even have to be rich to be on the radar, as the actions of the Italian government. New rules mean that all British expats will be required to declare their assets, including savings accounts held at home. Before, only more sizeable assets, those greater than £10,000, needed to be declared. The authorities must also be told of all transfers of cash or investments into the country.
It follows a tightening by the authorities in the British favourite of Spain. In April, the Spanish government required any resident with an overseas asset worth more than €50,000 and who lives in Spain at least six months of the year to declare what they own abroad.
James Hickman, who runs money transfer company Caxton, said his firm had seen no sign of more Britons buying in Greece. "People who are buying are sticking to the more traditional countries and those perceived as safer, such as France," he said.
Memories of assets being frozen in Cyprus remain fresh.
While no extra tax is being demanded by the Italian government, the changes in the declaration rules pose the danger that some form of eventual wealth tax becomes easier to enforce. Could Greece follow suit? After all, is the Mediterranean country with the biggest hole in its finances.
Its new promise of residency may entice a new pool of buyers with large – and potentially taxable – assets.
Such a move would cause a flight of capital and be entirely counterproductive. Common sense would hopefully prevail. But with prices still falling and further state prying possible, most Britons should be able to resist Greece's charms.